Mega-events may get less ambitious as Brazil counts World Cup costs

Plagued by delays and opposition at home, the World Cup in Brazil might be a turning point for sporting mega-events, forcing soccer's governing body and the International Olympic Committee to accept less ambitious bids to reduce the risk of public backlash. Described by Brazil's government as "the Cup to end all Cups," the tournament kicked off on Thursday to a backdrop of controversy and concern.

The world soccer organization, FIFA, is facing corruption allegations over how Qatar won the right to host the 2022 World Cup as well as match-fixing claims, fewer countries are keen to host big events and even some sponsors are starting to question the "halo effect" of associating with them. Ever since the 1992 Olympics in Barcelona, which set the gold standard, large sporting events have been increasingly used to drive infrastructure projects and try to regenerate cities.

Sports economists and sources inside FIFA say Brazil, the most expensive World Cup ever at an estimated cost of $11.3 billion, has shown both the limits and the risks of this model. Although the nature of the bidding process means countries able to splurge on state-of-the-art stadiums will still attract support, there is a growing sense among the populations of cities and nations considering being hosts for major sporting events that bigger is not always better.

"I think we are at a turning point in the history of mega-events and I think the turning point will lead to a very much reduced ambition towards infrastructure connected with these events," said Wolfgang Maennig, a professor at Hamburg University who specializes in sports economics. For Maennig, who won Olympic gold at Seoul 1988 as a German rower, big sporting events have become so political and controversial they risk losing both corporate sponsors and countries willing to host them.

He points to the IOC's difficulty in finding a country to hold the 2022 Winter Olympics. Germany's Munich and Switzerland's St. Moritz-Davos both withdrew planned bids when people in the two places voted 'no' in referendums, leaving the IOC scrambling for a suitable candidate. In Brazil, which will also host the 2016 Olympics, protests and strikes have dominated the public mood since millions took to the streets during a World Cup warm-up last June to bemoan poor public services.

"The positive to be taken out of Brazil is that we have learnt from it and will do things differently next time," one FIFA source said. The source added that FIFA should have insisted that Brazil cut the number of host cities from 12, which would have reduced the number of potential problems with unfinished infrastructure, and made good on the threat to move games if venues weren't quite ready for prime time.

Soccer's European body UEFA has already got the message - reducing the burden on any one country for its European Championship, with the 2020 tournament to be played in 13 cities across Europe.

For sponsors the equation may be changing too, as negative headlines have swelled from the usual trickle to a flood. Sponsors took the rare decision to speak out on the corruption probe into Qatar's bid, with Adidas saying the negative debate around FIFA "is neither good for football nor for FIFA and its partners." Coca-Cola was similarly outspoken.

"The minute soccer moves from the sports pages to the political pages I think sponsors have to get concerned because their message is getting crowded," said David Carter, director of the Sports Business Institute at the University of Southern California. "People are flat-out nervous," he said. "The last thing you can afford when you're investing hundreds of millions of dollars into a global sports opportunity is to have to cross your fingers and hope for it to turn out alright."

Carter said the price FIFA commands from sponsors was at risk of going down if they saw less benefit from being directly connected with FIFA and the World Cup. Still, that is unlikely to happen anytime soon given that sponsorship deals are usually organized over many tournaments - Adidas for example has signed up as a FIFA sponsor until 2030.

And the mega-events remain very healthy on some levels. For example, the prices for television rights have continued to rise with little sign of abating. Sixty percent of Brazilians now think hosting the Cup is bad for Brazil, according to a recent poll, and thousands have marched nationwide carrying banners telling FIFA to "go home." Brazil may have exploded with street parties as its team won the opening game on Thursday but scattered violent protests were a reminder that many locals remain angry over the cost of the tournament.

One source working at a leading World Cup sponsor said the firm had been forced to change its marketing strategy in response to public negativity surrounding this year's event. However, Andrew Sneyd, an executive at World Cup sponsor Budweiser responsible for marketing, was more upbeat on Brazil, saying it was Budweiser's largest campaign to date and no adjustments had been made in response to local opposition.

Changing the way these events are structured is not easy. In countries other than the most advanced soccer economies like Britain or Germany, stadiums have to be built and infrastructure improved to put on events like the World Cup. The challenge is how to make them less ambitious and less controversial without excluding developing nations who almost always need to invest heavily to get venues up to standard.

A different FIFA source said there was a growing awareness of the social and economic responsibility that came with putting on the World Cup but that the bidding process remained one of faith - you have to trust the country chosen will deliver on its promises.

Still, the tide seems to be turning because of growing popular resistance to huge spending on sporting events. For Maennig the answer lies in bids that are more collaborative with the local population.

"I am pushing my home city Berlin to have a completely different Olympic bid (for 2024) by asking residents to participate in an Olympic concept they would be in favor of," he said.